What over-65s need to know about super

If you’re over 65 and looking to top up your super, there are a few things you need to know.

Superannuation can be confusing at any age but especially once you hit your mid-60s. If you’re hoping to top up your super over 65 but are no longer working, the options available to you are limited. If you are working, you’ll need to meet eligibility requirements. Here’s what you need to know.

Can I still contribute?
The answer is yes, but only if you satisfy a work test. The test requires you to work for at least 40 hours during a consecutive 30-day period each financial year in which you contribute to your super balance. Remember not to exceed the contributions cap of $180,000 in a financial year, otherwise you’ll be taxed 47 per cent.

The work needs to be “gainfully employed” as the Australian Taxation Office puts it. This means it doesn’t include unpaid work, such as volunteering. If you satisfy the work test and you’re between 65 and 69, your super fund will be able to accept compulsory super contributions made for you by your employer.

What’s the maximum age for voluntarily contributing to super?
Once you hit the remarkable milestone of 75, you won’t be able to make any more voluntary contributions to your super balance. If you’re still working, however, your employer is required to make superannuation guarantee payments.

Tax deductions will need taxable income
If you’re planning on claiming a tax deduction on concessional contributions to your super, you’ll need to have taxable income. This includes money coming in from being employed, your business (if you have one), or from net rental income, so any investment properties you may own.

Does the bring forward rule still apply?
Make the most of the bring forward rule before you turn 65 because when you celebrate your 65th birthday, you won’t be able to access it anymore. The bring forward rule relates to non-concessional (after-tax) contributions, with the cap set at $180,000 a year. If you go over this cap in a financial year, the bring forward rule would be automatically triggered. This means that you’d be able to boost your super quickly without being penalised for going over the cap for that year.

“It’s used to allow clients to get more money into super before a major change in their situation,” Chris Cornish, principal financial adviser at Perth-based Avant Financial Services, explains. “This may be before retirement, before starting a transition to retirement strategy or before they turn 65 and can no longer use the bring forward rule. This later step is useful for someone who plans to only work an extra year or maybe two years.”

It’s a great strategy for people who have sizeable assets outside of the super environment. If you’re 64 years or younger, take advantage of the bring forward rule if you want to put a lot of cash away into super. If you’re 65 or older, you can still make after-tax contributions but you won’t be able to go over $180,000 in a financial year.

“The bring forward rule allows three years of contributions, essentially allowing contributions without the work test beyond the age when the work test is required,” he says. “Even if a person plans to work an extra five years, the bring forward rule guarantees the contributions. Whereas health or a change of mind may mean they don’t continue to work and hence, would not otherwise be able to make the contribution. For this reason, all of my clients who plan to keep working past age 65 still do the bring forward rule, wealth permitting, before 65 (or the year when they’re not 64 in any day of the financial year).”

Build your partner’s super
While there’s not a lot of options open for people over 65 when it comes to superannuation, particularly if you’re not working, there is one other avenue to explore – spousal contributions. “If a person 65 or over is working, they can contribute after-tax money into super, which is always the best place to have your non-lifestyle assets due to the favourable tax treatment,” Mr Cornish says.

“If they’re not working, they can’t contribute. However, often a spouse is of a different age and people can load up their younger spouses super, with non-concessional contributions without worrying about the work test (assuming the spouse is under 65 for at least a day of the financial year).”